Inmarsat’s Sukawaty Reflects on Time as CEO (Part One)

[Satellite News 02-07-12] Andy Sukawaty’s eight-year tenure as CEO of Inmarsat began in 2004 and ended on Jan. 1, 2012. Replaced at the CEO role by Rupert Pearce, Sukawaty now serves the MSS operator as its Executive Chairman. In this first part of a two-part interview conducted with Sukawaty in December, the former CEO spoke with Satellite News about his experiences in the Inmarsat leadership role and outlined the goals and strategies that he employed to make a long-term impact on the MSS market.

Satellite News: Where does Inmarsat stand heading into 2012? What will the company’s focus be under a new CEO?

Sukawaty: It has been another year of huge activity and progress for Inmarsat. The main focus in 2012 is on driving new terminal sales and activations. Between BGAN, SwiftBroadband and FleetBroadband, and IsatPhone Pro and IsatData Pro, we are very focused on getting a foundation of new generation terminals out there to drive revenue growth. In doing that in the maritime market, we have seen decreases in revenues per ship, because the value that customers are getting is much better, and the price-per-bit or per-minute basis is better.

Historically, what we have seen is that people will use it more over time. We think it is a good long-term strategy, but is has impacted the short-term numbers a little. The growth in our core maritime business has been flat, but the real surprise has been how quickly people have taken to the new terminals, so it is somewhat of a good problem to have. We feel very good about the future, particularly if you couple that with the major activity going on behind the scenes with the Inmarsat 5 program (Global Xpress).

Satellite News: What do you think of as your most significant achievements during your eight years as Inmarsat’s CEO?

Sukawaty: We went from a company that took in about $300 million to $400 million in revenue to now $1.4 billion in revenue in 2011 with profits growing in parallel. Coming in, I think the most significant achievement was the leverage buyout itself and the privatization of Inmarsat. I worked on this for nine months before I even came into the company. Then, it was the launch of the Inmarsat-4 satellites, which occurred just after I came into the role. That was a huge milestone for the company to move to the next generation of services and systems under a $1.5 billion investment program.

In 2005, there was the IPO and listing the company, and bringing it onto the FTSE as an important U.K. technology company. There is also the launch of the handheld service last year, which many people say is a leader in the mobile satellite business. I think the launch of streaming services on BGAN was another fundamental achievement. I think a lot of people see that as just another service, but it really isn’t to our users. There was a huge development that went on behind the scenes to develop BGAN. It is a particularly important service for our media and government customers.

Then, there was the transformational transaction when we acquired Stratos, which is our largest distributor. With that acquisition, we had obtained a new distribution agreement with all of our distributors. It was a move that took a historic multi-tiered distribution structure that had too many tiers to it, and flattened it out. There also was our acquisition of Segovia, which gave us a position in managed services and government, which we know is a high growth area. More recently, was the acquisition of Ship Equip, which got us into the VSAT business with a ‘priming the pump’ activity for our new GlobalXpress system.

I should also mention LightSquared. The deal we have in place with LightSquared is now generating over $400 million in cash for the company. It strengthens our balance sheet. During this period, we have not only been able to increase our dividends significantly, but also enter into a share buyback program. The returns to shareholders we have been able to generate have been excellent. Then, the decision to invest in Global Xpress really set us up for the next stage, to really step into the whole new realm of broadband. We know this is where the market is going, and that really bodes well for the future of the company.

Satellite News: Do you think Inmarsat has accomplished all that you set out to do as CEO?

Sukawaty: I think we have done what we set out to achieve and more. It was not in the plan to acquire Stratos. It was not in the plan to launch another generation of satellites this quickly. Yes, the Inmarsat-4s, SwiftBroadband, FleetBroadband and so on were in the plans, but this new generation of services have generally taken off more quickly than we would have forecast. I also think we are bigger than we set out to be both in terms of the profits and the top line. Inmarsat is much more solid as a company now and poised to deliver a wider range of services to these niche markets we serve. We are focused on these mission critical applications. We are very proud of this. We think a lot of companies lose their way by branching into things that they are not fit to pursue. I think we have stuck to our knitting and been able to grow within that niche. That is something we are proud of.

Satellite News: If you could name one highlight of your time in charge, what would it be?

Sukawaty: I would say the Inmarsat-4s and the establishment of a new generation of services, FleetBroadband, SwiftBroadband and BGAN. These are revolutionary services. If you go out and see how they are being used, it is quite phenomenal. They are being used by aid agencies in disaster areas and to the Volvo Ocean Race, where video is being transmitted from ships. You could not have done these things five years ago. I am very proud of what we are able to deliver using this next generation of satellites. It was a big risk. People did not know how far data services were going to go in those environments. That was the question. We took the risk and are now seeing the dividends of that decision.

Part two of this interview will be featured in the next edition of Satellite News.

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